Industry Insights

Three Ways Regional CSPs Can Compete with Multinational Telcos

By Ideas @ AppDirect / October 1, 2018

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In recent years, much ink has been spilled over the revenue challenges faced by the telecommunications industry. Despite this, multinational communications service providers (CSPs) still sit in a position that many would envy. They have far-reaching networks that can span dozens of countries; they have entrenched relationships with customers that are difficult to disrupt; and the have the resources to outlast—or simply acquire—smaller competitors.

Clearly, large CSPs are formidable, and indeed many outperform industry benchmarks for profitability, including the global telecom average operating margin of 17 percent. But, multinational telcos are not invincible. “The idea of being at the top of the food chain makes these companies sound ruthless and all-conquering,” the Economist recently reported, but as the magazine puts it, “overextended” may be more fitting.

As multinationals stretch to cover the globe, it’s inevitable that some may lose focus.

As multinationals stretch to cover the globe, it’s inevitable that some may lose focus. This means there are chinks in the armor that smaller domestic and regional CSPs can exploit to succeed in the fiercely competitive telecom sector. However, smaller telcos must be careful to make strategic choices that will have the greatest impact on their own bottom lines. With that in mind, here are three ways regional telcos can compete with multinational CSPs.

1.) Offer a Complete Digital Experience

The key differentiator that sets successful regional CSPs apart from their peers—both large and small—is clear: They focus on digital channels. According to consulting firm Capgemini, “these are smaller telcos that have been in operation for less time than traditional incumbents. They generally adopt either a digital-only” or hybrid operating model.

Why is digital so important? When done right, a digital experience is more convenient and seamless, so much so that digital is a deciding factor in customer churn. In fact, 46 percent of customers who say their telcos have “poor” digital technologies planned to switch carriers within a year. In contrast, 14 percent of customers who rated their operators “great” in digital technologies planned to do the same. And it’s not just Millennials who want digital experiences: Almost 60 percent of customers across all age groups would switch to a digital-only operator.

60% of customers across all age groups would switch to a digital-only operator.

While many CSPs say they focus on digital, only 36 percent of customers believe operators have used digital technologies to improve their experience. This disconnect presents a huge opportunity for domestic and regional telecom companies to offer the complete digital experience customers are craving.

2.) Make Customer Service a Top Priority

It’s no secret that the telecom industry has a less-than-stellar track record when it comes to customer service. In fact, the overall CSP industry Net Promoter Score (NPS) is just 31, placing it 14th out of 20 industries.

But, there’s a segment of CSPs that outperforms the industry average by a significant margin: smaller, regional telcos that offer proactive, digitally savvy customer service. An analysis by Capgemini found these telecom companies achieve an NPS of up to 55, 24 points higher than the typical CSP.

The difference in NPS between telecom companies that prioritize customer service and those that don’t can have a huge impact on revenue. The same Capgemini analysis discovered that high-NPS telcos saw average revenue growth of 33 percent, while low-NPS telcos saw revenue declines of -7 percent on average.

High-NPS telcos see average revenue growth of 33 percent.

For this reason alone, it should come as no surprise that 68 percent of senior leaders across all industries say customer experience is their number one strategic priority. For smaller domestic and regional CSPs that want to challenge multinational competitors, customer service should be top of mind.

3.) Provide Local, Specialized Products and Services

As business becomes increasingly global, many still prefer to buy services from local providers. This is especially true for small to medium-sized businesses, where one in five SMBs select local resellers for their telecom and IT services.

Here, regional CSPs have the clear advantage. They are often based in the communities they serve and understand the unique needs of their customers. One example is Bluegrass Cellular. Headquartered in Elizabethtown, Kentucky, Bluegrass was the first to offer digital cellular service to central Kentucky in 1998. Today it offers a range of cellular products and cloud-based business applications to its mostly rural customers.

73% of SMBs are overwhelmed by their telecom and IT choices.

Geographic focus is not the only way for smaller CSPs to succeed. Specializing in certain customer segments with targeted products and services is another way to win market share. Again, this approach can be particularly effective with SMBs. Seventy-three percent of small businesses are overwhelmed by their telecom and IT choices. When smaller CSPs become expert technology advisors, they help fill the knowledge gap and provide a personalized experience that larger, more impersonal telcos can’t match.

The Tools to Compete with Global Players

When it comes to competitive advantage in the CSP industry, bigger is not always better. For domestic and regional telecom companies that want to stake their claim, there are ample opportunities to set your company apart and build long-lasting customer relationships that drive revenue. To learn more about the strategies, processes, and technology to capitalize on these opportunities, download AppDirect’s latest eBook, “The SaaS Customer Experience Handbook,” below.


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